TMI Blog2022 (7) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... d to suspend/cancel the licence of the Customs Broker who processed the exports. It is not the responsibility of the Customs Broker to physically go to and verify the existence of each exporter in every location, let alone, keeping track if the exporter has moved from that address. In this case, there is no clarity whether the exporters were not available at the registered premises on the dates of export or if they ceased to operate after the export. Even if the exporters have changed their addresses and failed to intimate, it cannot be held against the Customs Broker. Scope of the obligations of the Customs Broker under Regulation 10(n) - HELD THAT:- It requires the Customs Broker to verify correctness of Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN),identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information - The verification of documents part of the obligation under Regulation 10(n) on the Customs Broker is fully satisfied as long as the Customs Broker satisfies itself that the IEC and the GSTIN were, indeed issued by the concerned officers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oker under Regulation 10(n) does not include keeping a continuous surveillance on the client to ensure that he continues to operate from that address and has not changed his operations. Therefore, once verification of the address is complete, as discussed in the above paragraph, if the client moves to a new premises and does not inform the authorities or does not get his documents amended, such act or omission of the client cannot be held against the Customs Broker. Thus, the Customs Broker has not failed in discharging his responsibilities under Regulation 10(n). The impugned order is not correct in concluding that the Customs Broker has violated Regulation 10(n) because the exporters were found to not exist during subsequent verification by the officers - appeal allowed - decided in favor of appellant. - C/50997/2021-DB - FINAL ORDER No. 50561/2022 - Dated:- 4-7-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL) Shri L.B. Yadav, Consultant - For Applicants Shri Nagender Yadav, Authorized Representative - For Respondents ORDER We have heard Shri L.B. Yadav, learned Consultant for the appellant and Shri Nagender Yadav, learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd appointed an Inquiry Officer, who, after considering the reply filed by the appellant and completing the inquiry submitted his Inquiry Report in favour of the appellant on 25.3.2021. The concluding paragraph of the inquiry report is as follows: 6.2 In view of my findings above, I am of the considered opinion that the Noticee/CB obtained the requisite KYC documents and thus conducted the KYC verification with the utmost diligence possible in the given circumstances and the allegation of violation of provisions of Regulation 10(n) of the CBLR, 2018 has not been established against CB. (emphasis supplied) 4. Thus, the Inquiry Officer found that the charge in the show cause notice that the appellant had violated Regulation 10(n) of CBLR, 2018 was not established. The Commissioner issued a show cause notice and the appellant submitted its reply dated 5.5.2021 to the show cause notice before the Commissioner. The Commissioner, therefore, passed the impugned order holding that the Inquiry Officer had erred and that the allegation of violation of Regulation 10(n) against the appellant was established and accordingly passed the impugned order. 5. The questions which need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yalinee International As during physical verification, the exporter-assessee found non-existent and the exporter- assessee did not respond to the letters sent to him through email for submission of details/documents in pursuance of CBIC Circular No. 131/1/2020-GST dated 23.01.2020, N.A. (Not available) has been mentioned in the columns where details are not available in registration details of the exporter assessee in Saksham System. Signed by the Superintendent on 8.7.2020 6 Bimla Impex All the details above have been filled solely on the basis of registration details of the exporter-assessee available in Saksham System. Further, the bonafide of the assessee also appear doubtful as analysis from E way Bill portal hits of circular trading and existence of fake ITC generator(s) in the supply chain of the assessee. In view of the above, it appears that the exporter- assessee is not bonafide Signed by Deputy/ Assistant Commissioner on 9/07/2020 7 Aftab Enterprises The physical verification (discreetly tried to sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suse of export promotion schemes, fraudulent availment of export incentives and duty evasion by bogus IEC holders etc. In this regard, a detailed guideline on the list of documents to be verified and obtained from the client/customer was also provided. Here, it appears that the CB failed to exercise due diligence and grossly violated the KYC guidelines of the said Circular dated 08.04.2010 read with the provisions of the CBLR, 2018 as a number of exporters have been found to be untraceable. As per the mandate of the Regulation 10 (n) of the CBLR, 2018 read with the Circular No. 09/2010-Customs dated 08.04.2010, it was incumbent upon the CB to verify identity and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information which apparently the CB have failed to do. 26. I find that the inquiry officer has erred in his inquiry report in concluding that the Noticee/CB obtained the requisite KYC documents and thus conducted KYC verification with the utmost diligence possible in the given circumstances and the allegation of violation of provisions of Regulation 10 (n) of the CBLR, 2018 has not been established against CB. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddress by using reliable, independent, authentic documents, data or information which apparently the CB have failed to do so. The Circular No. 09/2010-Customs clearly states that in case of an individual firm or organization out of the 6 documents mentioned in the Annexure, any two will suffice. Whereas, in case of other firms or organisation, all the documents listed respectively, in the annexure needs to be obtained by CB. On perusal of the list (provided by CB) of documents obtained by CB from various exporters, it is clear that CB has not taken the documents as prescribed in the said Circular from each and every exporter. Further, stating about Circular No. 02/2018-Customs dated 12.01.2018 which states that in case of individuals, a single identity documents having proof of identity as well as proof of residence would suffice eg. Aadhar Card. On plain reading of the above mentioned Circular that this Circular has referred Circular No. 07/2015-Customs dated 12.02.2015 and Circular No. 13/2016-Customs dated 26.04.2016. Both these circulars pertains to relaxed KYC norms, which authorized courier companies were required to fulfil. From this, its very clear that the revised norms pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for verification, the exporters were not found operating at the business premises and the input tax credit (ITC) was reported to be inadmissible. This could mean either that these firms never existed at the premises at all and the GST Registrations were issued by the officers to non-existent firms and the officers have also been receiving GST Returns filed by them or that the firms existed originally and later ceased to operate from the premises. 13. The show cause notice alleged that the Know Your Client [KYC] guidelines issued by CBIC Circular no. 9/2010-Customs dated 8.4.2010 were violated by the appellant because it failed to exercise due diligence since a number of exporters have been found to be untraceable. The show cause notice also alleged that as per the mandate of Regulation 10(n) of the CBLR, 2018 read with the Circular no. 9/2010-Customs dated 8.4.2010, it was incumbent upon the appellant to verify the identity and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information which apparently the CB failed to do. 14. The appellant‟s submissions before the Inquiry Officer, the Adjudicating Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d entities, the appellant cannot be blamed for trusting the IEC issued by the DGFT. Similar is the case with respect to other documents such as PAN card (issued by the Income Tax Department), Driving Licence (issued by the Transport Department), Voter ID (issued by the Election Commission). When a document is issued by a Government authority, it is reasonable to presume it to be valid. It is not open to the appellant to question the issue of these documents and as a Customs Broker to sit in judgment over the decisions of these officers. If the verification reports are true and none of the exporters existed at their premises, the irresistible conclusion is that all these officers of various departments have been either extremely careless or were operating under flawed systems which allowed documents to be issued to non-existing businesses. 19. It would have been a different matter if the documents produced by the appellant were fake or forged and were not issued by the officers. Such is not the case. In fact, the entire investigation by DGARM was initiated based on the GSTIN issued to various assessees as available in its System. Therefore, there is no possibility of the GSTIN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r each import/export transaction. When such code is mentioned, there is a presumption that an appropriate background check in this regard i.e., KYC, etc. would have been done by the customs authorities .. (emphasis supplied). 22. The Customs Broker is not Omniscient and Omnipotent. The responsibility of the Customs Broker under Regulation 10(n) does not extend to ensuring that all the documents issued by various officers of various departments are issued correctly. The Customs Broker is not an overseeing authority to ensure that all these documents were correctly issued by various authorities. If they were wrongly issued, the fault lies at the doorstep of the officer and not the Customs Broker. 23. It is possible that all the authorities who issued the above documents had issued them correctly and thereafter, by the time of verification, situation may have changed. If so, it is a ground for starting a thorough investigation by the officer and is not a ground to suspend/cancel the licence of the Customs Broker who processed the exports. It is not the responsibility of the Customs Broker to physically go to and verify the existence of each exporter in every location, let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itory. The question which arises is has the Customs Broker to satisfy himself that these documents or their copies given by the client were indeed issued by the concerned government officers or does it mean that the Customs Broker has to ensure that the officers have correctly issued these documents. In our considered view, Regulation 10(n) does not place an obligation on the Customs Broker to oversee and ensure the correctness of the actions by the Government officers. Therefore, the verification of documents part of the obligation under Regulation 10(n) on the Customs Broker is fully satisfied as long as the Customs Broker satisfies itself that the IEC and the GSTIN were, indeed issued by the concerned officers. This can be done through online verification, comparing with the original documents, etc. and does not require an investigation into the documents by the Customs Broker. The presumption is that a certificate or registration issued by an officer or purported to be issued by an officer is correctly issued. Section 79 of the Evidence Act, 1872 requires even Courts to presume that every certificate which is purported to be issued by the Government officer to be genuine. It re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. However, these are not the only documents the Customs Broker could obtain; documents issued by any other officer of the Government or even private parties (so long as they qualify as independent, reliable and authentic) could meet this requirement. While obtaining documents is probably the easiest way of fulfilling this obligation, the Customs Broker can also, as an alternative, fulfill this obligation by obtaining data or information. In the factual matrix of this case, we are fully satisfied that the appellant has fulfilled this part of the obligation under Regulation 10(n). 30. The fourth and the last obligation under Regulation 10(n) requires the Customs Broker to verify the functioning of the client at the declared address using reliable, independent, authentic documents, data or information. This responsibility, again, can be fulfilled using documents or data or information so long as it is reliable, independent and authentic. Nothing in this clause requires the Customs Broker to physically go to the premises of the client to ensure that they are functioning at the premises. Customs formations are only in a few places while exporters or importers could be from any part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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